Bankruptcy And Your House – Essential Facts (1)

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It is possible for you to remain living in your
house, provided all the boxes can be ticked.
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• Your lender has a mortgage over your house and,
  at all times, has the right to sell your house as
  mortgagee in possession if you default. You
  should ensure that your mortgage payments are
  kept up to date.

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• The Trustee views your payment of the mortgage
  payments as an occupation fee and requires you to
  properly maintain the property pending the
  Trustee selling the interest of the bankrupt
  estate in the property.

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• For you to stay living in the house long term it
  will be necessary for a trusted family member or
  friend to buy out the interest of the bankrupt
  estate in the house.

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• Before a Trustee can deal with an associated
  third party in regard to a property, he will
  conduct investigations to confirm that the
  mortgage and transactions pertaining to the
  property are legitimate and have not been
  contrived to defeat creditors.

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• Once the Trustee has documented that transactions
  pertaining to the house are legitimate, he will
  issue a report to creditors to advise that he
  intends to deal with an associated party to
  realise the interest of the bankrupt estate in
  the property. The Trustee will allow creditors a
  period of time to object. If a creditor objects,
  the creditor is required to provide a legitimate
  reason that has substance.

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• When all of the boxes have been ticked by the
  Trustee, the Trustee will then be in a position
  to negotiate with the third party for that
  person to buy out the interest of the bankrupt
  estate in the property.

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• It is important to note that the value of the
  property will be the value at the time agreement
  is entered into and not the value at the date of
  bankruptcy.

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• The Trustee will determine the value of the
  property by obtaining a valuation by an
  independent Registered Valuer.

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• The Trustee will be open to realising the equity
  in the property or selling the property to the
  associated third party. For both scenarios the
  Trustee requires a written contract to be in
  place.

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• To realise the equity in a property the Trustee
  will deduct the debt owing on the mortgage from
  the valuation amount provided by the Registered
  Valuer, to determine the sale amount.

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• To sell a property the Trustee will look to
  realise the property for the valuation amount
  advised by the Registered Valuer.

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• To give certainty and clarity the Trustee will
  only enter into an agreement with an associated
  third party by written agreement. This enables
  parties to freely talk to the Trustee regarding
  the property and be safe in the knowledge that
  nothing is binding between them and the Trustee
  until a written agreement (contract) is put into
  place and exchanged.
• Further and more detailed information on options
  regarding house properties can be obtained from
  this website or by calling Alan Nicholls on 1300
  676 998.

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